The Australian Securities and Investments Commission (ASIC) is under fire for using two-year-old information to make a point about financial planners’ patterns of advice. The Preferential Remuneration Project – a surveillance project carried out by the regulator in 2002/03 which investigated the payments made by companies to planners who advised clients to use their product – turned up “some discrepancies”, the regulator said yesterday. 

ASIC says the project, which was undertaken to identify the extent to which payments affect planners’ quality of advice, revealed that planners don’t always disclose adequate information about preferential remuneration payments when in-house products are recommended.

But the peak body supporting planners, the Financial Planning Association (FPA) says the project was undertaken more than two years ago and “no longer reflects today’s practice”.  

CEO Kerrie Kelly says the association has undertaken significant improvements since the project was undertaken, including making a successful integration of the Financial Services Reform Act (FSRA).

“I have no doubt that if ASIC conducted research and surveillance today into the quality of advice available to consumers the results would be markedly different, as will be shown when ASIC carries out further surveys.

“Nevertheless, we are reminding FPA members that they must continually examine and monitor their practices to ensure high standards are maintained,” Ms Kelly said.

Admitting the project was undertaken before the FSRA was implemented and before planners adhered to new regulatory standards, ASIC Executive Director of FSR Ian Johnston says the regulator will nevertheless be “paying particular attention” to planners.

“ASIC expects that any payment of preferential remuneration will specifically be disclosed to the investor, and that licensees maintain clear records of how they and their advisers are complying with their legal obligations.

“ASIC is aware that several institutions have reviewed their remuneration practices since ASIC undertook this work. ASIC acknowledges the work undertaken by industry bodies to assist their members comply with the requirements of the FSRA,” Ms Kelly said.

Mr Johnston says ASIC will continue to work with industry to develop appropriate guidelines for the disclosure of remuneration, and will conduct further surveillance to monitor compliance with record-keeping obligations.